Saving energy now, using less later: energy efficiency in the Western Balkans

Demand for energy is expected to increase by as much as 70% in the Western Balkans over the next two decades.

Improved energy efficiency measures in public buildings around the region represent savings of up to 40% of total energy consumption, which can help ensure more secure and reliable energy supply to fuel economic growth.

The World Bank Group, with support from the Energy Sector Management Assistance Program, is working with the region’s governments to significantly scale-up energy efficiency programs.

Energy supply in the Western Balkan countries is heavily dependent on imported fossil fuels, costing over $4.1 billion in 2012. With demand for energy in the six countries of the Western Balkans expected to increase by as much as 70% in the coming two decades, policymakers in the region are now being faced with the daunting challenge of meeting this demand in an affordable and sustainable manner. The expected annual increase in demand for energy of 3% over the next 15 years will require Albania, Bosnia and Herzegovina, Kosovo, the Former Yugoslav Republic of Macedonia, Montenegro, and Serbia to invest more $70 billion in this sector.

Scaling Up

In these countries, policymakers are now looking at a broad range of options to help them address this challenge. More and more, governments in the region are turning their attention toward energy efficiency (EE) measures, which could save their countries an estimated $3.4 billion. Recognizing the growing potential for energy savings from EE, governments in the region have begun developing targeted approaches with the aim of exploiting these benefits - including the introduction of EE Laws and National Energy Efficiency Action Plans (NEEAPs) that target energy savings of at least 9% by 2018.

Until now, these governments have relied on small-scale, pilot projects funded by donors to demonstrate the potential for energy efficiency in different sectors. While instrumental in highlighting the possible benefits of a variety of EE options, these programs have nonetheless been limited in scope.

However, a new program being coordinated with The World Bank Group, aims to change this.

In the past, it was common to introduce small pilot projects to demonstrate the viability of energy efficiency measures. What we are seeing now is a strong commitment by these governments to scale up this agenda, which we believe can result in tremendous energy savings in the years to come.

Jas Singh Senior Energy Specialist at the World Bank

INFOGRAPHIC - Energy in the Western Balkans. See the infographic in high resolution.

A new report, Scaling-Up Energy Efficiency in Buildings in the Western Balkans, provides a roadmap for how countries in the region can achieve significant and sustained efficiency gains in one of the most promising areas for energy efficiency savings: public buildings. Key steps identified include establishing sustainable financing schemes, where public agencies can repay the investment costs from the energy savings, thereby allowing the funds to resolve. This, along with pooling of government and donor funds into national-level programs can help create a more coordinated approach, strengthen existing institutions and achieve savings at a greater scale.

Building a Market

Having identified the potential effectiveness of these measures, governments throughout the region are now working with the World Bank Group on ways to actually implement many of these measures, with recently completed programs in Macedonia and Serbia and ongoing investment programs in Bosnia and Herzegovina, Montenegro and a new project in Kosovo . As part of this effort, a recent Workshop co-sponsored with the Energy Community Secretariat, brought representatives from the region together in Vienna, Austria with experts from the World Bank Group to finalize a series of guidance notes aimed at helping to pave the way towards implementation of large scale energy efficiency projects across the region.

These notes cover a wide swath of recommendations – ranging from the development of a functioning energy-services market to the establishment of a funding mechanism to finance future EE projects. They also lay a foundation to inform the process of designing specific EE policies and programs in the region by drawing from a variety of best practices, case studies, and plans.

This current push by governments in the Western Balkans and their partners to go beyond pilot projects emphasizes a new, more comprehensive approach that addresses the need for both the inputs required to significantly scale-up energy efficiency projects in public buildings - such as money, materials, and labor - as well as the solid market infrastructure needed to support this emerging industry. Increased emphasis is now being placed on the creation of business models and incentives for energy service companies, market development, and financing options – in addition to retrofitting public buildings and other EE projects currently underway.

This more holistic approach also aligns with the larger, Sustainable Energy for All initiative. Focusing on the tangible actions such as retrofit buildings, while simultaneously fostering initiatives the development of a well-functioning energy market in these countries, can better enable business to grow, develop new markets, and generate new jobs in the sphere of energy. By focusing on energy efficiency, governments are also demonstrating that investing in energy today can help build a more efficient tomorrow.